Earnings call transcript: Hermès Q1 2026 revenue hit by currency headwinds

Hermès International SCA reported its first-quarter 2026 earnings, revealing a revenue of 4.1 billion euros, a 6% growth at constant exchange rates but a 1% decline at current exchange rates due to significant currency headwinds. The luxury brand’s stock fell by 10.4% in pre-market trading, reflecting investor concerns over the impact of geopolitical tensions and currency fluctuations on its performance.

Key Takeaways

• Hermès reported a 6% revenue growth at constant exchange rates, but a 1% decline at current rates due to currency headwinds.
• The company’s stock dropped 10.4% in pre-market trading.
• Strong performance in the Americas and Japan, with 17% and 10% growth, respectively.
• Middle East sales were significantly impacted by geopolitical tensions, leading to a 6% decline.
• The company maintained strong local customer growth in Europe despite tourism headwinds.

Company Performance

Hermès demonstrated resilience in Q1 2026, achieving a 6% revenue growth at constant exchange rates. However, currency fluctuations led to a 1% decline in revenue at current exchange rates. The Americas and Japan showed robust performance, with growth rates of 17% and 10%, respectively. In contrast, the Middle East faced significant challenges due to geopolitical tensions, resulting in a 6% decline in sales.

Financial Highlights

• Revenue: 4.1 billion euros, 6% growth at constant exchange rates, 1% decline at current rates.
• Earnings per share: Not disclosed in the summary.
• Currency headwinds amounted to approximately 300 million euros.

Market Reaction

Following the earnings release, Hermès’ stock price fell by 10.4% in pre-market trading, reflecting investor concerns over the company’s exposure to currency fluctuations and geopolitical tensions. The luxury retailer is now trading near its 52-week low, with the stock down approximately 18% year-to-date. According to InvestingPro data, the company maintains a P/E ratio of 37.65, suggesting premium valuation despite recent price weakness. The stock’s decline was significant given its previous 52-week high of 2,606 euros.

Outlook & Guidance

Hermès provided revenue forecasts for the coming quarters, with expectations of 4.8 billion euros in Q2 and 5.3 billion euros in Q4 2026. The company’s fundamental strength remains evident, with an impressive gross profit margin of 71% and a return on assets of 19.24% for the last twelve months. The company plans to expand its production capacity and open new stores in key markets, including the Americas and Asia.

Executive Commentary

Hermès management emphasized the strength of their product pipeline and the company’s ability to adapt to challenging market conditions. They highlighted the successful launch of new products, such as the Faubourg Express bag, and the expansion of production capacity with new workshops planned in France.

Risks and Challenges

• Currency fluctuations pose a significant risk to reported revenue growth.
• Geopolitical tensions in the Middle East could continue to impact sales.
• Supply chain disruptions, particularly in air freight, may affect product availability.
• The luxury market’s reliance on tourism exposes Hermès to potential declines in tourist flows.

Q&A

During the earnings call, analysts inquired about the impact of geopolitical tensions on Hermès’ Middle East operations and the company’s strategy to mitigate currency risks. Management reiterated their focus on expanding local customer bases and enhancing production capabilities to offset these challenges.

Full transcript - Hermes Intl (HRMS) Q1 2026:

Eric du Halgouët, Chief Financial Officer, Hermès: Ladies and gentlemen, welcome to the 2026 Q1 Revenue Analyst Conference. The floor is now to Eric du Halgouët, CFO, and to Alexandra Boucheron, in charge of Investor Relations. Over to you. Good morning, one and all. Thank you very much for joining for this conference. The Group’s consolidated revenue amounted to EUR 4.1 billion in the first quarter of 2026, up 6% at constant exchange rate with double-digit growth in Americas, Japan, and Europe, excluding France. Moreover, Greater China continued its slight growth. This level of growth is all the more remarkable since the Group has enjoyed strong growth over recent years, especially in 2024, 2025, especially in Greater China, when the rest of industry was not growing. Due to the significant negative impact of currency exchange rate, around EUR 300 million, sales declined slightly by 1% at current exchange rate.

At the end of March 2026, Americas, Japan and Europe, excluding France, recorded strong growth in sales. Despite the slowdown in tourist flows linked to the situation in the Middle East, sales in the group stores increased by 7%. Furthermore, wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports. In keeping with our policy of sharing the fruits of our growth, at the beginning of 2026, Hermès distributed EUR 328 million to employees in respect of 2025. This includes profit sharing and incentive schemes in France, and a EUR 3,000 bonus to all employees. In a tense geopolitical environment, Hermès maintains its course true to its long-term strategy, supported by its abundant creativity, its uncompromising quality, and the loyalty of its customers. Hermès continues to be profitable, to grow in 2026 with confidence and conviction.

The fundamentals of the Hermès model are more than ever a differentiating strength. Therefore, for 2026, our outlook remains unchanged and the Group confirms an ambitious goal for revenue growth at constant exchange rates. Over now to Alexandra for the regional and division breakdown. Good morning, one and all. Let’s take a look at the regional breakdown. The figures are at constant exchange rate. At the end of March 2026, as Eric mentioned, Americas, Japan, and Europe, excluding France, recorded strong growth in sales. France and Middle East are struggling because of the current geopolitical context. First of all, Asia, bar Japan, is at +2%, so recorded growth in Q1, driven by the loyalty of local clients and the House’s value strategy. Greater China continued its slight growth. Korea maintained solid momentum while performance in the rest of the region was more subdued.

Alexandra Boucheron, Head of Investor Relations, Hermès: In January, a new store opened in Hanoi, Vietnam, and that strengthened the house’s presence in the country. Japan next grows also, +10%, continues to record solid growth supported by strong footfall and the loyalty of our local clients there. The store, Umeda Hankyu in Osaka, was expanded and renovated in March. Americas, +17%, delivered a exceptional Q1 after strong performance in 2025. Growth is balanced across all the markets, the United States, Canada and South America. Europe now, excluding France, posted 10% growth, so once again delivered a solid performance supported by local demand. France, -3%, was affected by a slowdown in tourist growth, particularly in March, linked to the situation in the Middle East.

The 16th edition of the Saut Hermès event, which brings together the world’s leading show jumpers, was successfully held under the glass roof of the Grand Palais in Paris at the end of March. This international event combines sporting excellence and the promotion of our craftsmanship and know-how. The area Other, -6%, primarily includes the Middle East, which was significantly impacted by recent geopolitical developments in the region from March onwards, notably the UAE, Kuwait, Qatar and Bahrain. Let’s move on now to the division breakdown, also at constant exchange rate. At the end of March 2026, Leather Goods and Saddlery, Other Hermès Divisions, and Silk and Textiles recorded robust performances. Leather Goods and Saddlery is at +9%. It benefited from the strong desirability of the collections and increased production capacity.

The Faubourg Express bag, a new style with an elongated format, echoes travel bags, and the Collier d’Attelage bag, echoing these curved line straps and rings of the eponymous collar, has been particularly successful as well. The Herbag line has been enriched with a new mini format, the Herbag 20. Last Friday, we inaugurated our new production workshop in Loupes. Production capacities continue to expand with the planned workshop opening of Charleville-Mézières in 2027, Colombelles in 2028, and Les Andelys in 2030. That’s for the leather workshops due to open. Hermès thus continues to strengthen its local footprint in France and developing employment and training opportunities here. The Ready-to-wear and Accessories sector delivered a stable performance and continues to grow. The Women’s Fall/Winter 2026 show at the Garde Républicaine in March was very well received.

Following its January unveiling in Paris, the latest men’s Fall/Winter collection by Véronique Nichanian, Artistic Director of Hermès Men’s Universe for 37 years, sparked great emotion at the February presentation in Tokyo. The Silk and Textiles sector is up 8%, recorded solid growth, driven by continually renewed creativity across both the women’s and men’s collection. The L Envole Carré scarf perfectly illustrates this creative vitality, creatively echoing the theme of the year, venturing beyond. Perfume and Beauty recorded stable sales. The Hermès collection welcomed Musc Pallida in February, while the Jardin collection was enriched with a seventh creation, Un Jardin à Cythère, aligned with this year’s theme and promising the discovery of an unexpected garden. In January, Hermès Beauty also launched Plein Air, its first skincare foundation, available in 34 shades.

In a still challenging environment, the Watches métier, -4%, expanded its offering by presenting several timepieces in Geneva at the Watches and Wonders show. Showcasing also its know-how, the new Hermès H08, featuring a state-of-the-art skeletonized titanium movement and the Arceau Samarcande, the minute repeater, which enriches the family of great complications. Hermès also continued to expand its production capacity with the extension of its watchmaking facility in Le Noirmont, Switzerland, scheduled for completion by 2028. The other Hermès divisions grew by 7%. They include jewelry and the home universe, which continue on their momentum, showcasing the full creative strength and singularity of Hermès. The Haute Bijouterie event, Double Tour, celebrating the excellence of the house’s jewelry craftsmanship, took place for the first time in Tokyo in March. It presents a jewelry narrative in motion and the beauty of an ever-renewed bond.

Conference Moderator, Moderator: The new porcelain service, Natures Marines, was unveiled in January in Paris. Thank you very much for your kind attention, and we are now available if you have any questions. Ladies and gentlemen, you can now ask your questions by dialing star key and one on your phone. Please limit your questions to two per person. The first question is from Luca Solca from Bernstein. Over to you. Good morning. Thank you very much for taking my question. First of all, I was wondering, given the growth that you’re recording today, I wondered if you were maybe up against more competition with the renewals at Chanel, at Dior. In our analysis, we’ve seen that the footfall in China benefits to novelty. With this new competition from outside, are you going to change your growth formula at all or not?

Eric du Halgouët, Chief Financial Officer, Hermès: Do you think that you need to do more of the same, basically, or do you need to recalibrate your strategy? Second question, are there some temporary elements that impact the availability of products or of stocks during Q1? That would help us to better understand the results of Q1. Thank you very much. Well, thank you very much, Luca, for those questions. As I mentioned, the fundamentals of Hermès are going to be crucial going forward, especially in this more complicated context. Therefore, we are not going to change the Hermès model. Creation lies at the heart of everything that we do. We have this freedom to buy, freedom to create, that we are going to stand by. What we see for the latest collections is that all the new products were very successful. Now on your question on stocks.

We have good stocks at the moment, especially in Ready-to-wear and shoe. We had very good sell-through rate for the Spring/Summer collection, which was sold during Q1. We have stock ratios which are quite low. All of this is going to be addressed in the next few months. In any case, we’re not going to change the model of the group, to answer your first question. Will there be more innovation, do you think? The next question comes from Kepler Cheuvreux and Charles-Louis Scotti. Good morning. Thank you very much. I have two questions. First of all, could you quantify the impact of the conflict in Middle East on organic growth of the group? What’s the direct impact in the region, but also the impact across the world? I know that other groups have done it.

Second question, I understand that there’s a slowdown in Europe and in France due to a drop in tourism. For the impact outside of Japan, I don’t really understand because I see that other brands are growing faster. Could you tell us a bit more about the APAC region? Okay. A quick update on the Middle East. I have to start by thanking our teams who are doing a great work out there. We regularly reach out to them, and we focus on their safety first. This is why some of the stores actually were closed at the beginning of March, or we changed the opening hours. What is quite amazing is to see that our employees are all there.

We’ve got about 500 people out there in the Middle East, 400 in the UAE, and for Bahrain, Kuwait, and Qatar, another 100 people. What you need to bear in mind is that for January and February, we had great double-digit growth, which was very homogeneous across these two months. It’s only in March that the revenue started to go down. In the Middle East, we have six stores. Three of them are directly operated by us. In the UAE, we have two stores, one in Abu Dhabi, one in Dubai. They make up most of the revenue for the area. We operate through three concession stores in Qatar, Bahrain, and Kuwait. We have no stores in Saudi Arabia to date and no e-commerce at local level either.

When you take this region, which is called Other, which mainly makes up the Middle East, you can see that it makes up 4.3% of the total revenue of the group. If you add to this the sales to Middle East clients that travel to other regions of the world, mainly in U.K., Italy, and Switzerland, and France, Italy is a country that is nonetheless growing very quickly, in spite of the fact that Middle East customers make up a big share of the revenue there. We had to close some of the stores, at the beginning of March, mainly in Dubai and then in Bahrain and Kuwait, because of the airports that closed and for security purposes. Our revenue dropped by 20%-30% depending on the day and on the stores that we operate directly.

To answer your question, we estimate that the impact for the group will be 1.5% for the group for Q1. The 7% I mentioned earlier should have been 8.5%, if we hadn’t had these developments in the Middle East. Early April, we can see that there is a slight improvement because all the stores are now open in the Middle East. I’d like to conclude by saying that our fundamentals remain strong with great teams out there and loyal clients. We are confident when it comes to the future developments for the region. To answer now your second question on the Asia Pacific, I’m going to start with Greater China. As for 2025, the region is growing slightly compared to a high basis point.

We’ve had several years of constant growth in a difficult context, as you know. We’ve got a quite homogeneous growth in Greater China, be it Mainland, Hong Kong, Macau, and Taiwan. It’s also worth noting that we had a great Chinese New Year last year, so we are growing slightly, compared to 2025, but 2025 was a high comparison point. We talked about the end-of-year trend in 2025. We see that traffic or footfall rather is flatlining, which means that it is very consistent or is slightly picking up. No other trends that are noteworthy for us for the beginning of the year for Greater China. Now, in Asia, we have two markets that are performing really well, Korea and India, and a more subdued situation in Singapore, for example. There’s also the case of Thailand, where we have more export customers.

The growth that you see at 2%, if you remove retail, which was disturbed, retail is at 3%. The next question is from Anne-Laure Bismuth from HSBC. Over to you. Good morning. Well, I have two questions for you. First of all, on current trading, thank you very much for clarifying the early April trends. Could you tell us about current trends at Group level in April? How do they compare? Second question on Leather Goods. In light of a performance which is slightly under what was expected, could you tell us if your 6% increase in volumes and 6% increase in sales, are you going to stick to that? Because that would mean that there should be a strong speed up in the rest of the year. Are you still confident you can reach that?

Well, for all geographical regions, there is no disruptions in the trends. We see that there is a strong momentum in the U.S., for example, but for the rest, no change in our objective. For Leather Goods, indeed, we have 9% growth in Q1. It’s worth reminding also that our annual objective is not necessarily linear from one month to the next or one quarter to the next, and that’s down to our artisanal model. There can be some issues with manufacturing, which means that there are some delays that we catch up later. From one quarter to the other, our production is not linear. Our overall annual growth objective remains unchanged. We were also very glad to open our 25th Leather Goods workshop in Loupes, which is the second in the Bordeaux region.

Just a final word on this to say that demand remains very strong in all markets, both for iconic bags and for all the other bags. It’s worth reminding that growth for Leather Goods is going to pick up, speed up in months to come gradually. The next question is from Edouard Aubin from Morgan Stanley. Over to you. Good morning, Eric. Two questions on my side. Could you please give us a bit more information on your exposure to airports? Because I know that you operate these stores directly. Tell us more about international travelers and your exposure to that. You also have a greater exposure to local clients than your competition. Could you give us some numbers on that exposure to international tourists? Second question, you just talked about growth 6% for Leather Goods for this year.

Edouard Aubin, Analyst, Morgan Stanley: You tell us that this remains unchanged. I asked Axel Dumas the question in February, for the longer term, are you not going to reduce the number of iconic bags that you make to keep them desirable? Very much like what Ferrari does or not. Thank you. Right. Regarding travel retail. We mainly operate concession stores. It’s not a huge share, but out of the 60 concession stores that we have, about 40 of them are affected. Deliveries to the network was affected because of the drop in footfall in airports, but also because it was harder to deliver these goods because they travel by air and often go through Dubai, especially for stores that are located in Asia, South Asia and Korea. Regarding now tourism, which was your second question.

Eric du Halgouët, Chief Financial Officer, Hermès: The two regions where we are the most exposed to these export customers or tourism is number 1, France, especially in our Parisian stores. We see it quite clearly in France because our stores on the coast are doing really well and the stores outside of Paris and Saint-Cloud are doing really well. The Paris stores are more affected. If you look at the nationality breakdown, we see that it’s mainly clients from the Middle East and from Greater China who come less to Paris, and that is offset by a European clientele that has traveled to Paris and also American clients who travel to Paris. As I mentioned, Europe is affected by tourism, but less so. We can see in Europe a drop in the number of tourists from the Middle East. We see it in Switzerland, in the U.K., for example, but also in Italy.

There is, however, a significant increase in the number of U.S. customers in these places. What’s important to note for Europe is that local customers continue to grow, double-digit growth, actually, and that is very important in these current times. A final word on leather, there is no change to our strategy. We do have iconic products, of course, but we also have about 15 products which make up a huge part of the volume, and we remain true to our policy of freedom to buy for the markets. The stores are free to buy what they want and to give their chance to new models. Some disappear after a couple of years. Others emerge later on down the road, four, five years later. We’re going to stick to that.

In light of our production capacities, we make sure that we have this capacity to also produce new models and not just focus on the iconics, because we want to create other bags, not just the Kelly and the Constance. The next question is from Thomas Chauvet from Citi. Over to you. Good morning, Eric and Alexandre. Two questions. Number one, on jewelry and on the other divisions that are at +7%. After six years of double-digit growth, there is a slowdown in volumes in that segment. Could you explain this for us, please, because we’ve seen jewelry speeding up in Q1 for your competition? Secondly, on prices and on the resistance of clients to price increases, we’ve seen your figures for Q1. We have factored in the 1.5% impact of the Middle East.

Thomas Chauvet, Analyst, Citi: Do you think that the 6% price increase explains, to some extent, the greater volatility of these categories? How does it affect your aspirational clients? I think Axel Dumas spoke to this last year. We know that these aspirational clients bought a lot of Hermès products between 2020 and 2023. What of them now? Yeah, a comment on price increases, please. I know that the aim is to cover your input cost, but clients don’t necessarily see it that way or think about it that way. Thank you very much. Well, regarding your first question on the Other Hermès division, as you mentioned, it makes up jewelry and the home universe.

Eric du Halgouët, Chief Financial Officer, Hermès: What I can tell you is that for Jewelry, we haven’t got the exact figure, but it’s growing, and it’s growing close to double digits, whereas the Home universe and Tableware suffered a bit more of the slowdown and the current context in the Middle East. Jewelry, to conclude, continues to grow strongly and to drive the growth of the Group, and there’s no changes in the trends here. Regarding price increases now. As we always say, we remain true to our principle of passing through our input costs as little as possible. We’ve increased the wages of our employees. We’ve paid out bonuses. We have a free share plan as well. You need to bear that in mind. For divisions like Silk, we had great performance.

Our conclusion is that it’s really the quality of the collections, the colors, the formats that really make a difference. We don’t see any issues pertaining to price increases right now. I think that was your question in a nutshell, and yeah, that’s all we have to say on that. Alexandre says no. I think we’ve answered that question. The next question is from Carole Madjo from Barclays. Over to you. I have two questions on my side. First of all, on Middle East. Now, the region is quite profitable, so how is that going to impact your margins for H1 and for the full year? On Ready-to-wear.

Alexandra Boucheron, Head of Investor Relations, Hermès: There’s a slowdown in Q1 because it has remained flat. Can you tell us why there is this slowdown? Is it because of shoes sales? Are they underperforming compared to others? How can you maybe foresee growth in this area for Q2 and the rest of the year?

Eric du Halgouët, Chief Financial Officer, Hermès: At this point, the impact of the slowdown because of the Middle East is not significant on profitability. It remains to be seen whether the events continue for a month or two, but if it’s just two months, I think that we can absorb this impact without too many difficulties. Regarding Ready-to-wear and Accessories, we are indeed flat for Q1. Here the developments are slightly change up. Men and women’s ready-to-wear are slightly growing, but conversely, fashion accessories are slightly down and shoes are growing slightly. Overall, what we can say is that for ready-to-wear and for shoes, these divisions are strongly impacted by the slowdown in the Middle East and the slowdown in tourist flows towards France. Shoes, be it the sneakers and the Oran sandals, are very successful in the Middle East. That had a huge impact in Q1.

As I mentioned at the top, we’ve got a great sell-through rate for the new items for spring, summer collections for both men and women Ready-to-wear. We have low level of stocks for these novelties because of sell-through rates that are beyond our targets. We’ve got healthy stocks overall, and what I can tell you is that the fundamentals for shoe and Ready-to-wear are very solid. Strongly impacted that division by the developments in the Middle East. The next question is from David Tamberrino from CIC CIB.

David Tamberrino, Analyst, CIC CIB: Hello, Alexandre and Eric. My questions have been answered actually, but a quick question on the sequential performance across Q1. We see that LVMH and Kering have spoken to an improvement of trends in March, excluding the Middle East. Have you seen the same?

Eric du Halgouët, Chief Financial Officer, Hermès: Well, if you exclude the impact of the Middle East, we are, yes, slightly improving in March, but January, February, March are all months where we’ve grown homogeneously. A slight improvement in March. We’re now going to move on to questions.

Conference Moderator, Moderator: The next question is from Zuzanna Pusz at UBS. Good morning. Thank you for taking my questions. I’ll stick to two. First of all, on the tourism exposure, I appreciate, I guess I’m just a little bit confused. Having followed the company for over a decade, you always said you had a very low exposure to tourism, and that actually majority of your sales were locals, and I guess now there is some impact. I appreciate this is something you didn’t want to quantify before, but I guess given how material it seems to be now, is there any chance you could tell us what percentage of your sales in Europe is to tourists? Other companies say on average is, I don’t know, half of their sales in Europe. Any number would be very helpful for us and I think for investors to really understand the situation.

Zuzanna Pusz, Analyst, UBS: Secondly, maybe specifically on France, I know that, I think, in the French region, you sometimes book also wholesale sales and travel retail. Would you be able to tell us what is actually France region in terms of the actual retail performance? I’m asking because I wonder if this is not a region specifically exposed to people coming in because they know, well, at least that’s sort of what people argue on social media, that it’s easier to get a bag in France in some of the stores by buying Ready-to-wear and shoes. Obviously, it’s just all anecdotal. I guess my question is, what is actually France retail? Thank you.

Eric du Halgouët, Chief Financial Officer, Hermès: Regarding tourism, the region which is more impacted is France, where more than 50% of our sales are linked to sales to tourism. In France, as I mentioned before, we have a strong decrease of the Middle East customers, which is partly offset by a significant increase of the American customers. In Europe, to a lower extent, but we observe the same trend, a decrease of Middle East offset by Americans, and Greater China customers are slightly higher, but this is not significant. Regarding France, you can see -3% for the first quarter. If you exclude sales to travel retail and concessionaire, the decrease is only -1%.

Zuzanna Pusz, Analyst, UBS: Excellent. Thank you so much. Just to follow up on tourism, you said more than 50% of sales in France is tourism. If we took all Europe together, would you be able to quantify just so we can compare it to other companies? Is it less than 50% for all of Europe or also roughly 50% for all of Europe together with France?

Eric du Halgouët, Chief Financial Officer, Hermès: More than 50%. What is important is that in France and in Europe, sales to local customers are increasing. Even in Europe, double-digit increase.

Conference Moderator, Moderator: Excellent. The next question is from Melania Grippo of BNP Paribas.

Melania Grippo, Analyst, BNP Paribas: Good morning, everyone. This is Melania Grippo from BNP Paribas. I’ve got two questions. First, I wanted to ask you regarding your store openings in Q2. I think I recently saw the openings of your store in Beijing. Could you please give an update of the stores, especially the large ones that you are going to open in Q2? I would like to understand if, when talking the performance of leather was homogeneous across countries. Thank you.

Eric du Halgouët, Chief Financial Officer, Hermès: Alexandra will give you the main perimeter impacts we expect for the Q2, Q3, and Q4 because we had a very limited number of perimeter impact in Q1 while we have quite a big planning for the remaining part of the year.

Alexandra Boucheron, Head of Investor Relations, Hermès: Yes, exactly. As Eric said, pretty negligible impact for the first quarter. For the rest of the year, I would say that we have around 20 projects in the pipe for the coming quarters. In terms of opening, we have a few. I can give you some examples. Three openings projects in Americas, one in Chicago and two in New York, namely one in Williamsburg and one in Manhasset. Another project that we have in Japan, an opening in Nagoya, in Q2. The last, an opening that just took place at the beginning of April, of a new store in Beijing Sanlitun that we talked about. Maybe talking about renovation with enlargement of stores, I would say that there are two key projects that we’ve already communicated about. One is beginning of mid-June in the U.K., in London, in Bond Street.

It’s actually moving a store from one location to the other. It will be a very nice maison that we will open mid-June. Maybe another project that I could name is the one in Geneva, where we will actually open a new store in Q4 this year. Obviously, we have other projects in Americas, in APAC, or in Japan throughout the year in terms of renovation with enlargement. Maybe just to give you a sense of the impact that it will lead to over the year, in terms of growth contribution, that should limit to a bit more than one % contribution on sales for the whole year. Because as you know, when we do open a new store, sometimes we close other. I would say that less, it should be a bit more than a % contribution.

Eric du Halgouët, Chief Financial Officer, Hermès: Regarding your second question, we have the same pace of growth by region, except for Middle East, where it’s a little bit higher due to the circumstances that you can understand.

Melania Grippo, Analyst, BNP Paribas: Thank you.

Conference Moderator, Moderator: The next question is from James Grismick of Jefferies.

James Grismick, Analyst, Jefferies: Thank you. Good morning, Eric and Alexandra. I had two questions, please. First one, can you please clarify the point that you made on air freight challenges? Did that only impact the wholesale channel? Did that impact also retail inventories in Asia in the quarter? If so, is that included in the 150 basis points impact that you quantified for us from the Middle East? Secondly, it would be great if you could please unpack the Greater China slight growth in Q1 performance. Can you perhaps differentiate by product category? Should we think of leather, for instance, mid-single-digit growth in Q1 from Greater China? That’d be very helpful. Thank you.

Eric du Halgouët, Chief Financial Officer, Hermès: The growth of +6% for the first quarter, as we said, is +7% in the retail activity, and it’s -7% in the wholesale business. Where does it come from? It’s mostly from travel retail and sales to concessionaire. As I explained when speaking about Middle East, Qatar, Bahrain, and Kuwait are today concessionaire, and we had to stop or to postpone our deliveries. It’s more for the concessionaire business or travel retail, it’s more a question of postponement than a cancellation for the time being. It’s timing.

James Grismick, Analyst, Jefferies: Okay. I just wanted to clarify, perhaps for translation purposes, that there wasn’t any impact on availability of air freighting via the Middle East to Asia that may have impacted inventories availability in Asia on leather. I just wanted to triple-check that.

Alexandra Boucheron, Head of Investor Relations, Hermès: You mean if we had difficulties to deliver our leather product to China?

James Grismick, Analyst, Jefferies: Correct. Yeah.

Alexandra Boucheron, Head of Investor Relations, Hermès: No, not specifically. No, it’s very much linked in the wholesale, I would say, to the travel retail, so obviously less travelers impacting travel retail. On top of that, we have part of the business that we do operate in the Middle East, that is still under concession. That goes into wholesale as well. The Qatar, Bahrain, Kuwait stores, we have one store in each of those places, I would say, and that are part of the wholesale as well. Obviously impacting negatively, the business into one of the wholesale.

James Grismick, Analyst, Jefferies: Very clear. I just wanted to exclude a second derivative impact, so that’s clear. Thank you. Yeah, on that route to China, perhaps if you could unpack leather versus non-leather would be super helpful.

Eric du Halgouët, Chief Financial Officer, Hermès: In China, the growth of leather is more or less in line with the non-leather businesses, which is good for us. It’s a slight increase combined of leather and non-leather business.

James Grismick, Analyst, Jefferies: Very helpful. Thank you.

Alexandra Boucheron, Head of Investor Relations, Hermès: Okay, great. Thank you very much. I think, Eric du Halgouët, maybe you would like to conclude?

Eric du Halgouët, Chief Financial Officer, Hermès: Yes, thank you.

Well, thank you very much for your kind attention and for all your very interesting questions. I’m going to conclude by saying that in this uncertain geopolitical context, the fundamentals of Hermès make us a interesting proposition, a differentiating also feature, and we’re very confident about the future. Thank you very much for your questions, and we’ll be speaking to you soon.

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